Cattle Producers Cut Short Positions

Cattle producers cut their net short positions to the lowest level in more than a year during the week ended Tuesday as managed money, swap dealers and other small speculators either cut their net long positions or took on added shorts.

The Commodity Futures Trading Commission’s weekly Commitments Of Traders report, which was released Friday for the week ended Tuesday, showed that producers held a net short position of 133,526 contracts, 14,513, or 9.80%, fewer than the 148,039 of the previous week.

Over the previous calendar year, the lowest net short position of cattle producers was the week ended Sep. 2 when it was 140,996 contracts, CFTC data show.

Meanwhile, managed money, a proxy for large speculators, reduced their net long position to 94,612 contracts, the lowest since the week ended Sep. 2 when it was 94,121 contracts.  Managed money’s net long position also was down 5,878, or 5.85%, fewer than the 100,490 contracts the previous week.

During the latest reporting week, the most-active Feb live cattle contract tried to rally but succumbed to pressure from a plunging feeder cattle futures market.  Tuesday, the contract fell the daily limit of $3.00 per cwt to a low of $158.97 where it closed.

The previous Tuesday, the Feb contract was wrapping up a week-long plunge of its own to settle at $162.40 after hitting a daily low of $160.75.

Wednesday, Thursday and Friday last week, the contract stabilized, put in a double bottom for the move and turned higher on Friday.

During the latest reporting week, total live cattle open interest declined 7,144 contracts, or 2.41%, to 289,609 contracts from 296,753 the previous week.

 

MANAGED MONEY GOES LONG FEEDER CATTLE

 

During the latest reporting week, feeder cattle futures prices began a five-day series of limit-down days in which managed money increased its net long position and producers went short.

The most-active Jan feeder cattle futures contract fell to $219.60 per cwt from a close of $232.77 the previous Tuesday, registering a freefall of $13.17, or 5.66%.

Yet managed money raised its net long feeder cattle position during the week to 7,236 contracts from 6,762 the previous week, a boost of 475, or 7.03%, the CFTC said.

Feeder cattle producers went short during the week, going from a net long position of 329 contracts to a net short position of 252, a move of 581 contracts.

Total feeder cattle open interest during the week declined 1,234 contracts, or 2.72%, to 44,212 from 45,446 the previous week.

 

MANAGED MONEY EXPANDS LONG CORN POSITION

 

During the latest week, the CFTC reported managed money had increased its net long corn position to 221,818 contracts from 216,801 contracts the previous week and the highest since the week ended May 13, when it was 262,666 contracts.

Meanwhile, producers increased their net short positions to 409,475 positions from 400,712 the previous week and the shortest they have been since the week ended May 13, when it was 437,144 contracts.

Corn futures jumped during the latest reporting week to close at $4.06 a bushel, up $0.23, or 6.00%, from the Tuesday, Dec. 9, close of $$3.83.

At the same time, total corn open interest increased 14,579 contracts, or 1.21%, to 1.224 million contracts from 1.210 million.

 

CASH CATTLE PRICES DROP AGAIN

 

Cash cattle were lightly traded $7 lower on a live basis last week at $156 to mostly $157 per cwt and around $252 on a dressed basis, down $2 to $5.

Packer buyers were filling needs for a holiday-shortened kill week this week, and they will be doing the same this week.